Ross Douthat

The Medicare Part D Analogy

By ROSS DOUTHAT

December 10, 2013

Responding to my weekend column, which gently pushed back against the sudden burst of liberal optimism about HealthCare.Gov, Ezra Klein gently pushes back against my point that Obamacare’s quest to enroll the young and healthy faces bigger hurdles than did its model, Romneycare, in Massachusetts:

Medicare Part D is left off this list, as often happens. But it’s the more direct comparison. It, too, was a polarizing national law that suffered from a terrible rollout. At launch, it was less popular even than Obamacare. In May 2006 — so, five months after its launch — a CBS/New York Times poll found 48 percent of seniors said they didn’t plan to join and 81 percent said the George W. Bush administration should extend the deadlines. A Gallup poll from about the same time showed 53 percent of seniors thought the law flatly wasn’t working.

But the program didn’t fail. Mark McClellan, who led the rollout effort, recalls that “by the spring of 2006 most seniors signed up. Every senior had heard about this program or knew people in it. And everyone was familiar with the delayed enrollment penalty. Those things together led to a big bump before open enrollment ended.” Today Medicare Part D is widely considered a success. Over 90 percent of seniors say they’re happy with it.

It’s true that the Medicare Part D analogy gets cited by Obamacare defenders more often than by the new health care law’s skeptics. Sometimes Part D’s example is invoked to criticize Republicans for their continued obstructionism (because after all Democrats mostly voted against the prescription drug benefit, but didn’t throw up endless roadblocks to its implementation), and sometimes, as in this instance, to cite a happy case where a health care law with a faulty website and flawed rollout ended up becoming pretty popular. But both comparisons have always seemed flawed to me, for the following interrelated reasons:

1) Medicare Part D faced political opposition, but not intense ideological resistance. The bill wasn’t a conservative pet project or the fulfillment of a long-running right-wing dream; rather it was an attempt at centrist co-option by the Bush administration, which his base swallowed because it seemed politically necessary. Meanwhile, Democrats who opposed the legislation mostly did so not not because they hated the concept, but because they wanted a more generous, more socialized bill — which is to say, they were taking the position vis-a-vis Part D that their party’s leftward fringe took vis-a-vis Obamacare — and because they didn’t want to let Bush get the credit on an issue they felt they owned. It’s not surprising, then, that even when the law was unpopular it didn’t generate resistance and create high ideological drama — that there was no “repeal Part D” movement on the left in 2004 or 2006 or 2008, no liberal equivalent of Ted Cruz trying to leverage the issue for his own ambitions, no talk about how the entire conservative project was on the line when the website wasn’t working. Whatever their objections to the form it took, Democrats explicitly wanted something like Part D, which meant that even during its flawed rollout there was an implicit bipartisan, pan-ideological consensus around the program that has never existed around Obamacare.

2) Medicare Part D did not depend on the same kind of mandate-regulate-subsidize model as Romneycare and Obamacare — not least because it was a more narrowly-focused program than either — which meant that its architects had less reason to fear a “death spiral” during the initial period of bureaucratic chaos. Yes, Part D imposed a “delayed enrollment penalty,” as Klein notes, on seniors who signed up for Medicare when they turned 65 but then waited for years to sign up for the prescription drug benefit. But there was no requirement that seniors sign up, no annual penalty for waiting, and neither the premiums nor the fine were nearly as central to the law’s design as the individual mandate is to Obamacare. What’s more …

3) Signing up for Medicare Part D was vastly cheaper than signing up for Obamacare. Was, and is: Today the average Part D monthly premium is just $31, while the average premium for a health insurance plan on the national exchange is about ten times that much. If the average Obamacare plan cost just a few hundred dollars a year to enroll, the short-term financial case for signing up would be much stronger, and the dangers of adverse selection much lower. It’s because the new law’s plans cost thousands of dollars, potentially, that there’s a serious risk that precisely the people the law needs to sign up will choose to remain uninsured. And because of that price differential, the example of Medicare Part D’s eventual enrollment success doesn’t necessarily tell us all that much about what the Obamacare pool will look like a year or five years hence.

The point of elaborating these three differences, incidentally, is not to argue that Part D was brilliant legislation, and Obamacare is necessarily doomed. The two programs do have significant elements in common, some of their differences redound to Obamacare’s credit (Part D rather famously didn’t even try to be deficit neutral, a standard the new health care law at least attempts to meet), and some of their similarities could be folded into a case that Obamacare could work out better than its doubters expect. (There were reasons to think that Part D would also come in way over budget; instead, it beat expectations, and the slowdown in health care costs that liberals are now suddenly crediting to Obamacare actually kicked off around the time Part D passed.)

But when it comes to the specific question of whether Obamacare is going to have trouble meeting its young-and-healthy quota, I’m just not sure Medicare Part D has that much to teach us. That program was less polarizing and less furiously opposed, it cost far less to join, and it wasn’t built around the same kind of cross-subsidization model as the Affordable Care Act. It had a rocky rollout, just as Obamacare has had a rocky rollout. But what it needed to recover was not identical to what the new law needs now, and over the next few years, to be reasonably considered a success.